AN Australian diplomat had been told of the jailing of Melbourne man Ben Zygier in Tel Aviv but had not passed it on, it was revealed today.

An inquiry has now been ordered into how Australian diplomats handled the imprisonment of Mr Zygier - the so-called Prisoner X - in Israel.

Foreign Affairs Minister Bob Carr ordered the review after learning today an Australian diplomat in Tel Aviv had been told by Israeli authorities of Mr Zygier's jailing in 2010.

However, he had not passed the information on through the appropriate channels.

Mr Zygier was found dead in his high-security cell in late 2010.

The Foreign Minister had earlier today said consul officials were not aware of the man's circumstances until his parents asked for help in bringing his body back to Australia.

The new information - that Israel had been open about his jailing to foreign diplomats - could make it harder to speculate that Mr Zygier was a Mossad intelligence agent.

It is believed the government was not told of the case until his family contacted DFAT to help bring his body back to Australia in December 2010 after he had been in jail for several months.

Mr Zygier, who moved to Israel from Melbourne in 2000, committed suicide in a high-security Israeli jail in 2010 after being held for months in great secrecy, the ABC reported on Tuesday.

The unsourced ABC story said that it "understood" the 34-year-old from Melbourne had been previously recruited by the Israeli spy agency Mossad.

Australian authorities are baffled by the case but one official familiar with the basic details said, "There could be a James Bond-style story in there."

There was no official comment on the story in Israel.

But within hours of the report surfacing, Prime Minister Benjamin Netanyahu's office summoned Israeli editors to ask them not to publish a story 'that is very embarrassing to a certain government agency', Israel's Haaretz newspaper said.

"The emergency meeting was called following a broadcast outside Israel regarding the incident in question," Haaretz said, giving no further information.

What's known is that in 2009 Israeli authorities jailed a man who was never identified publicly - but has become known as Prisoner X - in a top security prison, where he hanged himself in late 2010.

In the same period a former Melbourne man, 34-year-old Ben Zygier, committed suicide in a Tel Aviv jail, leaving behind an Israeli family including two children, and the allegation he was an agent for Mossad, the Israeli secret service.

Australian Government sources today said it was not known whether the two deaths were a coincidence, or that Mr Zygier was Prisoner X.

Mr Zygier, who used at least two other names, is reported to have been a regular traveller through the Middle East, which someone carrying only an Israeli passport would have great difficulty doing.

He arrived in Israel in 2000 and effectively disappeared from the radar of Australian authorities until his death.

Earlier a spokesman for Foreign Minister Bob Carr today told news.com.au the minister could not comment on matters which might be linked to intelligence issues.

However, the Foreign Minister is concerned that Israeli authorities did not notify Australian consular officials that a national was in jailed, or had died while in prison.

It is expected that a well-run nation such as Israel would automatically pass on that type of information.

The first the Australian embassy knew of Mr Zygier was when his parents contacted the Department of Foreign Affairs asking for help in repatriating his body in December, 2010.

Senator Carr is unlikely to demand further details from Israel unless Mr Zygier's parents and family demand an official explanation, and that has not happened.

The Zygier family, prominent in Melbourne's Jewish community, declined to co-operate with the ABC's Foreign Correspondent program which last night revealed the strange history of Prisoner X.

Senator Carr has said he is troubled by the allegations.

"It's never been raised with me. I'm not reluctant to seek an explanation from the Israeli government about what happened to Mr Allen and about what their view of it is," he told the program.

"The difficulty is I'm advised we've had no contact with his family [and] there's been no request for consular assistance during the period it's alleged he was in prison."

Two Israeli MPs on Tuesday questioned the justice minister over reports about the mysterious 2010 death of the man dubbed "Prisoner X" whose identity was kept top secret.

"This prisoner was detained under a name which was not his own. Do you know about this?" Arab Israeli MP Ahmed Tibi asked during an open question session in the Knesset, or parliament.

"Can you confirm that this Australian committed suicide in prison under a false name so it wouldn't be revealed he was being detained in Israel?" he asked outgoing Justice Minister Yaakov Neeman.

Similar questions were raised by the head of the leftwing Meretz party, Zehava Gal-On who asked Neeman if he considered it "normal that the prime minister's office should summon all the main media to avoid the publication of any information likely to embarrass Israel."

Until now, a complete media blackout has been imposed on the shadowy incident, with the Israeli press prevented from reporting the incident due to a strict gag order.

In response to the parliamentary questions, Neeman said he was not able to answer "because the justice ministry is not responsible for prisons".

"But there is no doubt that if true, the matter must be looked into," he added.

The story of Prisoner X first emerged in May 2010 when Israel's Ynet news website ran a story entitled "Who are you, Mr X?" in which it spoke about a prisoner being held in top secret conditions whose identity and crime was not even known to his jailers.

But the story was quickly taken offline due to a gag order.

The ABC report said the case of Prisoner X had come to be regarded as one of the most sensitive secrets of Israel's intelligence community with a tight gag order imposed on all details of the case.

Zygier had been living in Israel for about 10 years prior to his arrest in early 2010 and was married with two children, according to the channel, which said he had been recruited by Mossad.

It was not clear why he was arrested in "early 2010" but he was taken to Ayalon Prison in Ramle near Tel Aviv and held in the same cell used for the man who shot dead former Israeli prime minister Yitzhak Rabin in 1995.

There he was held in virtual isolation until his "apparent suicide" in December that year, the channel said.

After the Ynet article was published, the Association for Civil Rights in Israel wrote to complain to Israel's attorney general saying: "It's alarming that there's a prisoner being held incommunicado and we know nothing about him."

In response, the attorney general's office wrote back saying: "The current gag order is vital for preventing a serious breach of the state's security, so we cannot elaborate about this affair."

The ABC report said Zygier's body was found hanged despite "state-of-the-art surveillance systems," adding to the mystery surrounding the affair.

His body was flown to Melbourne where it was buried in a Jewish cemetery on December 22, 2010.

Zygier's relatives and friends declined to comment to ABC.

He was reported to be the son of Geoffrey Zygier, the executive director of the Victoria Jewish Community Council and one of the leaders of the Melbourne Jewish Community.

Ben Zygier was married to an Israeli woman and had two young children. He had reportedly spent a number of months in the Prisoner X cell before he was found hanged. Exactly what he did to end up in prison remains unclear.

The report said that the man attended Jewish schools in Melbourne's south east before studying law. His parents refused to be involved in the investigation.

It said that Zygier's imprisonment was so secret that not even his guards knew his name. However, word got out at the time of a mysterious prisoner and human rights groups wrote to the state to demand more information.